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Todd Pedersen founded the business that evolved to become Vivint, now a $2B enterprise (and one of America's Most Promising Companies) while in college.

Three Utah Companies were named to Forbes’ second annual America’s Most Promising Companies list. Number 46 – – is home of Founder and CEO Todd Pedersen.

This week, Utah’s MountainWest Capital Network (MWCN) is naming Pedersen Utah’s 2013 Entrepreneur of the Year. In honor of that event, I visited with Pedersen about his company’s most unusual route to success, and had him give me his advice for others. Here’s what I learned.

Todd Pederson is from Idaho (as I am – good points). He also counts Brigham Young University as his alma mater—no, wait a minute—he actually didn’t complete his BYU education. Like fellow Utah entrepreneur Josh James, CEO and Founder of DOMO (one of last year’s Most Promising Companies), he dropped out of BYU to continue building the startup company that the world now knows as Vivint.

(Pedersen jokes that his real reason for quitting the university was the due date for a 30-page paper, but I suspect the opportunity to continue growing his company was the greater motivation at play.)

From his earliest days in high school and college, it was clear that Pedersen’s academic curiosity was different than most. He didn’t mean to be impertinent, but his questions were invariably along the lines of “How will this benefit me in earning a living? How will this help to differentiate me in my work?”

It was actually a job rejection from a pest control company that spurred him to launch the team that evolved into Vivint. Burned by the denial, he hired 10 of his buddies to sell pest control during the summer for the rejector’s competitor—Terminex. He ran the team from a single-wide trailer on a single-horse stud farm. His mother was his angel investor, loaning him $5,000 (he repaid her with a $6,000 check at the summer’s end.)

The goal had been to earn $10-15,000 for the summer. He eclipsed the goal, earning $80,000 instead.

“I was interacting with the branch managers at Terminex, figuring out processes to deal with the bigger organization’s structure, which was bad,” he recalls. “They lacked the ability to see the potential in what we were doing. We were bringing them customers and they were actually unhappy about it, because it was causing them more work.”

Apparently someone caught on to the possibilities. In Fall, 1992, Terminex called Pedersen back and asked if he could expand his team to 80 people. He said, “Yes.”

The dress code is casual but the agenda is highly competitive at Vivint.

In 1993, as a college student, he was offered more than $1 million to sell altogether. He declined.

“This was where we learned to sell direct to customers,” he says. “I could see the potential for something much greater than we had. But I’d have never have guessed we’d grow to $2 billion.”

Fast forward to 1999: Pedersen founded APX Alarm, which he later evolved to Vivint. As the company grew he obtained credit agreements with Goldman Sachs in 2006 and 2009 to fund the company’s growth. In late 2012, the company – now serving 700,000 customers with 3,200 employees – was acquired by The Blackstone Group for $2 billion.

As to the individual who turned down Pederson’s job application—

“His company ended up going out of business,” Pedersen says. “I don’t rub it in his face. He’s become a friend. We were running ourselves on folding chairs and I ended up buying his furniture and equipment.”

Words to the Wise

Pedersen offers a few points of philosophy for other aspiring entrepreneurs.

Be Customer Driven – "Profitability is a by-product of serving our customers. We’ve always been driven by thinking about the customer first. Let’s see what the customers need and want, and then deliver it better than anyone else, and do it right. If we remember that focus, the profits will come.”

Be Dominant – “Our company’s culture has a very relaxed dress code. I’m known for wearing casual work clothes and having mud on my boots. But we have a strong culture around dominating. Everyone here expects to be excellent, and to continually do better than projected and promised on every front.”

Be Observant - “What else is out there? What can we do better? How can we improve? Blackstone has been an excellent partner. Our vision for the future of this company is huge. They’re at least pretending they believe we can actually pull this off.”

Be Frugal - “I’ve seen so many companies get thwarted by the expectation that as the company begins to grow and scale their incomes proportionately grow also. The founders and key executives think ‘I deserve a really nice house and a cabin and a boat, and a new car every year.’ They end up suffocating the business with their personal needs. I had two prior partners – and the one single thing we did best was that we never, ever put the company in a bad financial position because of our personal financial needs. We hardly paid ourselves anything until 2006. We had one dividend of $30,000 that year. But we reinvested to be sure we had liquidity. It was the best decision we ever made.”

Crystal Ball

In the years from 2006 to 2012 the company grew from $50 million to $2 billion. Currently, the company is still adding new divisions and products such as its new solar business. A year ago, the solar business went from 10 employees to several hundred. Pederson is predicting as many as 400 employees in the solar division by the end of 2013.

What about the downsides to a company that sells door to door? “With 700,000 customers, certainly we can’t keep that many people satisfied at once. Customer service is a continual issue,” Pedersen says. “That’s why we invest so heavily in our call center operations. Technology can break. And when people call you up, it’s not to say, ‘Hey there, I’m happy.’ We’re a consumer-facing business, and people call when they’ve got a problem. We have to stay continually focused on meeting those needs.”

For the future: “We consider it vital that we continue to innovate. Integrated services is a way we can continue to please these customers. It’s more important than ever that we stay relevant to the customers we have and to the base of consumers we don’t have as customers yet. But no matter how you look at it, we’ll need to be prepared to serve our customers. Lots of them.”

There’s another new project on Pedersen’s agenda as well – together with four iconic Utah entrepreneurs Rick Alden, Alan E. Hall, Josh James and Greg Warnock, he recently launched a program to jump start Angel-level investing through a new funding initiative called Plus550.

Plus550 is a streamlined funding program that provides high-speed and high-energy investments to fitting candidates in amounts that typically range to $100,000. Companies seeking additional capital can also benefit from the “50” additional co-investors that have aligned themselves with Plus550. Candidates provide information to the group via www.plus550.com. Most financings close within several days of submittal and companies often receive a check during their first meeting. Plus550 has funded seven companies so far, according to Clay Andrus who has been working with the group since its beginning: Chargeback Guardian, CloudVu, Contact Point, Drop Ship, Marketecture, Right Intel and Salt Stack.

Finally, a few words from Devin Thorpe (fellow Forbes contributor), current President of MWCN, on the reasons the group is naming Todd Pedersen its 2013 Entrepreneur of the Year:

“Todd Pedersen is an entrepreneur who effectively transformed a small group of students who formed a small sales force into a high-tech, capital intensive international enterprise,” said Thorpe. “Vivint is just now beginning to deliver on its full potential in home automation. I believe Pedersen’s future is destined to be even more interesting than his past.”

Thorpe also notes, “Todd has mastered the art of team building, recruiting both experienced and high potential sales associates, compensating them remarkably well and motivating them to achieve dramatic results.”

What does Pedersen think of the award?

“I don't consider this to be my award – it’s a representation that the right set of people, working together, have been able to do something great,” he declares. “There are plenty of people smarter and more capable than me. But I’ve worked really hard. I’m 44 and have probably put in the career hours of somebody who’s 74. But at the end of the day – with children who are 15, 12, 6-year-old twins, and a 2-year-old-I’m still changing diapers. You can’t do all of that and be feeling like you’ve gotten too cool.”

Disclosure – we have no agency relationship with Vivint, although Snapp Conner Partner A. Cory Maloy serves as a Trustee of MWCN. Additional reporting for this article was provided by A. Cory Maloy.